Google’s old business model is being killed off by the need to feed the irrational expectations of the stock market.
Yesterday I looked at some of the dreadful nonsense being thrown up in the Google results. Writers such as Cory Doctorow have put forward theories as to what’s going on, and if they’re right, Google is abandoning trying to serve not only users but also the websites it indexes.
Despite its size, the company’s investors consider it to be very much a growing business (it has a price-to-earnings ratio of 20:1). Doctorow points out that almost everything the company has achieved beyond search has been by acquisition, and “so long as investors believe Google is growing, it can buy other companies with its abundant stock rather than its scarce dollars. It can also use that stock to hire key personnel, which is especially important for AI teams, where compensation has blasted through the stratosphere.”
And Google needs to maintain that story of growth, or its share price will collapse. Doctorow continues: “You aren’t the target for AI, investors are: if they can be convinced that Google’s 90% Search market share will soon be joined by a 90% AI market share, they will continue to treat this decidedly tired and run-down company like a prize racehorse at the starting-gate.”
All this means that everything needs to be geared towards getting people to ‘use’ Ai, by thrusting it in their faces as a default.
Google’s old business model was “give us access to your websites, and we’ll direct people to you and make some money on the way by showing them adverts, so everyone wins”. It seems this is being killed off by the need to feed the irrational expectations of the stock market. In the meantime, as advertisers, we should be more grateful than ever that Google’s model is ‘payment by results’. However annoying Google search becomes, so long as they manage to keep people using it, we’ll still be able to buy website visitors from them.